### Understanding Price Elasticity of Demand**Problem 4:**When the price of product "X" is $ P1 = \$42 $, Shyanne purchases 20 units of product "X". When the price of product "X" is $ P2 = \$38 $, she purchases 30 units of product "X". Shyanne's "arc" price elasticity of demand for product "X" is calculated as $ E_{x,x} = $: - $-0.25$ and the demand for "X" is relatively elastic.- $-4.00$ and the demand for "X" is relatively inelastic.- $-0.25$ and the demand for "X" is relatively inelastic.- $-4.00$ and the demand for "X" is relatively elastic.- $-0.25$ and "X" is a "normal" good.**Calculation Tips:**Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. The formula for arc elasticity is:\[ E = \frac{\frac{Q2 - Q1}{(Q2 + Q1)/2}}{\frac{P2 - P1}{(P2 + P1)/2}}\]Where $ Q1 $ and $ Q2 $ are the initial and new quantities demanded, and $ P1 $ and $ P2 $ are the initial and new prices.

Elasticity of demand depicts how much consumer responds with the change in the price level.

Answered: * When the price of product "X" is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are the manager of a firm that receives revenues of $60,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross- price elasticity of demand between product Yand X is -1.4. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent? Instructions: Enter your response rounded to the nearest dollar. Use a negative sign (-) if applicable. %24
Suppose the demand for a Nintendo console is P = 600 - 0.05Q, where P represents the price of a console (in dollars) and Q is the number of Nintendo consoles sold in a certain market. If the price of each console is $300, what is the price elasticity of demand for Nintendo consoles in that market? O -0.0025 O -0.05 O-1 O-1.5 0-2
PRICE (Dollars per unit) 350 Z 225 175 Y W 50 Demand 0 10 35 45 70 QUANTITY (Units) For each of the regions listed in the following table, use the midpoint method to identify if the demand for this good is elastic, (approximately) unit elastic, or inelastic. Elastic Inelastic Unit Elastic Region Between W and X Between X and Y О О Between Y and Z О О О True or False: The slope of the demand curve is not equal to the value of the price elasticity of demand. True False
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Timmy is selling his toy dinos again. The consumer demand curve for thedinos is given by: x=(50-3p)^2 where p is the price per dino, and x is the demand in weekly sales. a.) Find the Elasticity of Demand function E(p) and evaluate it at the price p = $5.Is the demand elastic, inelastic, or does it have unit elasticity? Explain what this means inyour own words. b.) Find the price Timmy needs to charge for his dinos in order to maximize revenue.(Round your answer to the nearest cent.)
If Starbucks’s data analytics department estimates the income elasticity of demand for its coffee to be 2.5, how will the prospect of an economic boom (expected to increase consumers’ incomes by 5 percent over the next year) impact the quantity of coffee Starbucks expects to sell?Instruction: Enter your response rounded to two decimal places. It will change by _____ percent.
2. The demand function for a certain item is given by D (p) = 1000 - p³ Find the elasticity of demand to decide if the manufacturer should raise or lower the price from the current price of $5?
Suppose the price elasticity is -0.4. Then, a 10% increase in price will decrease the quantity demanded by options: A)0.4% B)4% C)25% D)40%
Jose owns a donut business in Los Angeles, and he wants to increase his total revenue. He knows that, when donuts are $1, he sells 200 an hour, and when he lowers the price to $0.75, he sells 280 an hour. A) Using the midpoint method, compute the price elasticity of demand for Jose’s donuts. Please show the formula used for understanding. B) Based on (A) is demand for Jose’s donuts elastic or inelastic? How do you know? Explain C) Should he raise or lower the price to generate more revenue.
11. Calculating %age Exx *3* When the price of product "X" increases 15 percent (+15%), the quantity demanded of "X" decreases 12 percent (-12%). The price elasticity of demand for "X" is: O "-1.25" and the demand for "X" is "relatively inelastic." "-1.25" and the demand for "X" is "relatively elastic." O "-1.25" and "X" is a "normal" good. O "-0.80" and the demand for "X" is "relatively elastic." O "-0.80" and the demand for "X" is "relatively inelastic." Save & Continue Continue without saving
4) Provide a simple definition of the price elasticity of demand and explain why knowing the price elasticity for her product is useful to the firm's manager.
*4* When the price of product "X" is (P1=) $42, Shyanne purchases 20 units of product "X" and when the price of product "X" is (P2=) $38, she purchases 30 units of product "X". Shyanne's "arc" price elasticity of demand for product "X" is (Ex,x =): O" -0.25 " and the demand for "X" is relatively elastic. -4.00 " and the demand for "X" is relatively inelastic. O"-0.25 " and the demand for "X" is relatively inelastic. O " -4.00 " and the demand for "X" is relatively elastic. -0.25 " and "X" is a "normal" good. Save & Continue Continue without saving

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